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Published: 12 May 2026,05:33
Daily Market Analysis New
*The Japanese yen weakened again despite recent government intervention, with EUR/JPY climbing toward the 184.5–185.3 zone as market pressure on the currency quickly returned.
*Persistent yield differentials, the Bank of Japan’s cautious policy stance, and rising oil import costs continue to weigh on the yen, keeping USD/JPY biased toward the 157–160 range.
*Tuesday’s US CPI report is the key near-term catalyst: hotter inflation could strengthen the dollar further and pressure the yen.
The Japanese Yen has once again come under selling pressure following recent interventions by Japanese authorities in the currency market. Despite the Ministry of Finance stepping in with substantial yen-buying operations estimated in the tens of billions of dollars to defend the currency against sharp depreciation, the relief proved short-lived. EUR/JPY has climbed toward its weekly highs, currently trading in the 184.5–185.3 area, signaling renewed weakness in the yen against the euro.
This development reflects the persistent challenges facing the yen. Wide interest rate differentials between Japan and major economies, particularly the United States, continue to weigh on the currency. The Bank of Japan’s cautious approach to policy tightening, with its benchmark rate held at 0.75%, contrasts with a firmer US dollar supported by resilient economic data and safe-haven demand amid Middle East tensions. Additionally, elevated oil prices are increasing Japan’s import costs, further pressuring the trade balance and limiting yen appreciation.
In the near term, the yen is expected to remain vulnerable to renewed weakness. USD/JPY may test higher levels toward 157–158, with potential retests of the 160 psychological barrier if US yields stay elevated or risk sentiment stabilizes. EUR/JPY could push further if bullish momentum continues. However, Japanese authorities are likely to remain vigilant, with verbal warnings and the threat of fresh intervention capping excessive downside moves and creating choppy trading conditions.
Tuesday’s US CPI release will be a critical catalyst. Hotter-than-expected inflation figures would reinforce dollar strength and add pressure on the yen, while softer data could offer some breathing room. Any meaningful de-escalation in Middle East geopolitical tensions would also support a modest yen recovery by reducing safe-haven flows into the dollar and oil. Overall, structural headwinds suggest a soft bias for the yen in the coming sessions, though sharp intervention-driven squeezes remain a risk. Market participants should maintain tight risk management amid elevated volatility
Technical Analysis
USD/JPY has begun forming a higher-low price structure following the sharp sell-off seen in the previous session, suggesting that downside momentum may be easing and that buyers are gradually regaining control.
From a technical perspective, a decisive break above the previous high at 157.90 would serve as a strong bullish signal, potentially confirming a near-term trend reversal and opening the path toward the next resistance level at 158.75.
Momentum indicators are increasingly supportive of this constructive outlook. The Relative Strength Index (RSI) continues to trend higher, indicating improving buying momentum, while the Moving Average Convergence Divergence (MACD) is crossing above the zero line from lower levels—both pointing to the formation of fresh bullish momentum.
As long as the pair maintains its higher-low structure, the near-term bias is likely to remain tilted to the upside.
Resistance Levels: 158.75, 159.90
Support Levels: 156.75, 155.60
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